
The Spanish second seed claimed seven of the last eight games to become the first man in nearly a century to lift four on the trot at in the principality.
He becomes the first to do that since New Zealander Anthony Wilding from 1911-1914.
Nadal, headed for another title defence and possible record at home in Barcelona next week, earned his 24th title over all and 19th on clay.
"This is the best I can play, this is something unimaginable," said the Spaniard. "For me, this is the best tournament in the world."
Nadal now stands an impressive 6-1 in clay court finals against Federer.
For Federer, who failed to capitalise on a double-break for 4-0 in the second set, his record against his hottest rival falls to six wins, nine defeats.
"It was a disappointing second set," said the Swiss 12-time Grand Slam champion. "I played the right way against him and then let him back into the match.
"Maybe I didn't play my best for sure. But it's tough against him. He deserved to win in the end, he's a helluva clay court player."
Federer came to the court after winning last weekend's Estoril trophy to start his clay campaign. He and Nadal have both lifted their first titles of the season in the space of eight days.
The Swiss will train next week in preparation for the Rome Masters while Nadal headlines in Barcelona.
Federer could only recall how he stood two point from defeat in his opening match and fought through this week to take a shot at the title he's never won among his career 54.
"It's a very positive week of coming back from the brink and beating great players on the way to the finals.
"I was pushing Rafa today, having the feeling I can beat him if I play the right way. That's a feeling I didn't have after Monaco last year (6-4, 6-4 defeat by Nadal).
"This year changed and that's a good thing. Just playing again, being healthy, moving well. It's just a good feeling to have again."
Federer stands 20-5 on a season which began for him with a case of glandular fever while Nadal improved to 27-6.
The Spaniard opens in the Barcelona second round after a bye against either Australian Peter Luczak or Italian Potito Starace.
By Bill Scott, dpa